SEC issues amended REIT rules to boost capital market

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January 10, 2026 | 12:00am

MANILA, Philippines — The Securities and Exchange Commission (SEC) has released the amended rules governing real estate investment trusts (REITs) as part of its efforts to further develop the capital market.

To enhance the regulatory framework for REITs to be at par with the country’s neighboring regions, the commission has issued  Memorandum Circular 1, Series of 2026, which provides  amendments to the revised implementing rules and regulations of the REIT Act of 2009.

“We wanted to start the year strong, which is why we spared no effort to make this REIT memorandum circular our first issuance of 2026,” SEC chairperson Francis Lim said.

“This signals the commission’s priorities for the year and underscores our continuing commitment to deepen the capital market while protecting the interests of the investing public and ensuring sound governance across possible REIT structures,” he said.

By establishing a more robust framework for the REIT market, Lim said the SEC is broadening opportunities for participation in real estate investment, helping more Filipinos benefit from long-term wealth creation.

The circular expands the definition of income generating real estate assets by allowing a REIT to directly or indirectly own income-generating real estate through a shareholding in an unlisted special purpose vehicle duly constituted to primarily hold or own real estate and wholly owned or partially owned by the REIT by at least two thirds of its outstanding and voting capital stock.

It also included within the definition of income-generating real estate those real properties with regular streams of income, or those with recurring and predictable cash inflows generated by the income-generating real estate and from lease of or other similar arrangements involving such properties and other passive income.

These may include rental properties from toll roads, railways, airports, air navigation facilities, ports, information and communications technology infrastructure, energy infrastructure assets, data centers, parking lots, buildings, malls, warehouses or storage facilities, immovable fixtures, machineries, facilities and structures as well as real rights over properties including but not limited to usufruct, easements and registered leases.

Excluded in the definition are real properties held primarily for sale or disposition, such as inventory properties and assets whose income is derived mainly from their sale rather their continuing use or operation.

The definition of infrastructure projects in the circular has also been amended to include both government and privately initiated projects.

Further, the circular extends the period for the utilization of reinvestment proceeds to two years, from the previous standard of one year from the date of receipt of the proceeds.

Reinvestment in the Philippines may take the form of investment in equity, the extension of loans or purchase of debt instruments or the repayment of loans or debt instruments in relation to any real estate or infrastructure project in the Philippines.

In keeping with the dividend distribution requirements of the law, the SEC said that should a REIT invest through an unlisted special purpose vehicle and/or an incorporated joint venture, that entity must also distribute at least 90 percent of its distributable income to the REIT and other shareholders, if any, before the REIT declares its own dividends.

Failure to do so shall be deemed a violation of the REIT’s own dividend distribution obligation, safeguarding the mandatory 90 percent payout rule for the investing public.

The revised guidelines also refine the definition of public shareholders of a REIT to ensure genuine democratization of ownership and strengthen corporate governance.

In line with the Securities Regulation Code, the term “public shareholder” refers to any investor other than those specifically excluded for having a vested interest or significant influence over the REIT.

This excludes the sponsor or promoter, their related corporations, and the directors, principal officers, or principal stockholders of both the REIT and its sponsor or promoter.

Under the new rules, “substantial influence” is a key disqualifier for public status and is deemed to exist when a person holds, directly or indirectly, 10 percent or more of the total issued and outstanding shares of the REIT.

Further, the definition excludes any person who, despite holding less than 10 percent of the total issued and outstanding shares of the REIT, may still exert influence over the management or operations of the company, such as when shares are held by the immediate family members of a director, principal officer, or principal stockholder sharing the same household.